Telco Talk

Sadly, I am no longer employed by IBM, so this blog which started as a team blog for the IBM Business Partner Technical Strategy Enablement (IBPTSE) Telecom team no longer represents IBM in any shape or form. As I became the Chief Telecom Architect for IBM for the WebSphere brand worldwide, I continued to write posts. The WebSphere brand merged into the new Cloud brand in 2015 and I retained the same role working with Telcos all around the world to design software solutions to solve their business problems. I left IBM in 2017 and am now working for DGIT Systems , a small IT company focused on helping Telcos be more agile through alignment with TMForum Frameworx - particularly for Order Management and Fulfilment solutions. My hope is to continue/resurrect this blog on Telecom business issues and technology.

Since I last posted about New Zealand's National Broadband project which seemed to me to be much more focused on the subscribers and the products they would have available to them (and the retailers that sold them) than the high speed backbone network. My impressions may have been tainted by the work I was doing with the Telecom New Zealand Undertaking In Progress (UIP) project that I was involved with - the rather public forced split of Telecom New Zealand's Retail, Wholesale and Network departments to ensure equivalency of input for all retail and wholesale partners for (only) broadband services.

My understanding of the situation has developed somewhat since then and we can see that the situation in New Zealand Government also involves a similar structure to what is happening in Australia with the Communications Alliance and the NBN Company. In New Zealand, the companies are a little different. Certainly, we have the NZ Government Ministry of Economic Development (MED) as one participant, then we have Crown Fibre Holdings (not much of a web site there!) -set up by the Government to manage the process of selecting the companies to build the National Broadband Network and manage the government's investment in the NBN. Together with the companies that are bidding for the deal Crown Fibre holdings will form Local Fibre Companies (LFC) which (combined) will match the government's contribution to the NBN. That will mean the total project will cost NZ$3 Billion** with the LFCs kicking in NZ$1.5B and the NZ government contributing NZ$1.5B. I dont have the full schedule, but from a couple of sources, I have compiled an overview of the progress to date:

What I find a bit interesting is that the government are only looking to cover 75% of the population by 2019. For a small country (compared to Australia at least), that seems to me to be a very low target to aim for. If we compare that with Australia's NBN project, their target is 90% coverage at greater than 100Mbps and 10% greater than 12Mbps (that's 100% coverage!) by 2017. Admittedly, the Australian project has about a year's head start, but it's also a MUCH bigger country with a population nearly five times larger. Lets have a quick look at the comparisons:

Australia

New
Zealand

Ratio

(AU
to NZ)

Population

22.4M

4.3M

5.2

Area

7,617,930
km2

268,021
km2

28.4

Population
Density

2.833/km2

16.1/km2

0.17

Planned NBN
Completion year

2018

2019

-

NBN
Coverage

22.4M
(100%*)

3M
(70%)

7.5

NBN
Cost**

AU$40B
= US$33B

NZ$3B
= US$2

16.5

NBN
Cost per person (US$/person)

US$1473

US$666

2.2

NBN
Cost per area (US$/km2)

US$4331

US$7462

0.6

* 100% coverage is split between greater than 100Mbps (90%) and greater than 12Mbps (10%)** One Billion is using the short scale definition = 109 = 1,000,000,000

What do I take from this quick comparison? Lets take a quick look at the numbers. Obviously, Australia is a much bigger country (28.4 times larger) and has a much larger population (5.2 time larger), so it is reasonable (in my opinion) that the cost per potential NBN customer should be higher for Australia (and it is at 2.2 times higher) but the thing that makes me ponder is the cost per square kilometre: New Zealand is nearly twice that of Australia. When the New Zealand target is only 70% of the population and thus enables them to avoid areas that are physically difficult to provide coverage to (I'm no NZ geologist, but I would imagine lots of the South Island's most mountainous areas would pose significant problems for cablers) I find myself wondering why the NZ network is going to be so expensive. I guess it could be a matter of scale - but I thought the biggest cost was actually laying the cables rather than the back end systems which every broadband network will need (routers, switches, administration and management systems). Maybe I am missing something - does anyone have any ideas?

edit: I've just found this quote in Wikipedia which (I think) is truely revealing when you consider New Zealand's 70% coverage target:

"New Zealand is a predominantly urban country, with 72% of the population
living in 16 main urban areas and 53% living in the four largest cities
of Auckland,
Christchurch, Wellington,
and Hamilton"

By only extending the NBN to those 16 main urban areas and nowhere else - they've achieved their target! You wouldn't want to live in country New Zealand and be dependent on a fast network!

Providing a National Broadband Network within a country is seen by many governments as a way to help their population and country compete with other countries. I have been involved in three NBN projects; Australia, Singapore and New Zealand. I don't claim to be an expert in all three projects (which are ongoing) but I though I would share some observations and comparisons between the three projects.

Where Australia and Singapore have both opted to build a new network with (potentially) new companies running it, New Zealand has taken a different path. The Kiwis have decided to split the incumbent (and formerly monopoly) Telecom New Zealand into three semi-separated 'companies' Retail, Wholesale and Chorus (the network), but only for the 'regulated products' which for the New Zealand government is 'broadband'. They all
still report to a single TNZ CEO. I have not seen any direction in terms of Fibre to the Home or Fibre to the Node, just defined the product as 'broadband'. The really strange thing with this split is that the three business units will continue to operate as they did in the past for other non-regulated products such as voice.

As an aside, the Kiwi government not regulating voice seems an odd decision to me - especially when you compare it to countries like Australia and the USA where the government has mandated that the Telcos provide equivalent voice services to the entire population. Sure, New Zealand is a much smaller country, but it is not without it's own geographic challenges in providing services to all kiwis, yet

A key part of the separation is that these three business units are obliged to provide the same level of service to external companies as they provide to Telecom and it's other business units. For example if Vodafone wants to sell a Telecom Wholesale product, then Telecom Wholesale MUST treat Vodafone identically to the way they treat Telecom Retail. Likewise Chorus must do the same for it's customers which would include ISPs as well as potentially other local Telcos (Vodafone, Telstra Clear and 2Degrees). This equivalency of input seems to me to be an attempt to get to a similar place to Singapore (more on that later). Telecom NZ have already spent tens of million of NZ$ to this point and they don't have a lot to show for it yet. It seems to me like the Government is trying to get to a NBN state of play by using Telecom's current network and perhaps adding to that as needed. For the kiwi population, that's not anything flash like fibre to the home, but more like Fibre to the node and then have a DSL last mile connection. That will obviously limit the sorts of services that could be delivered over that network. When other countries are talking about speeds in excess of 100Mbps to the home, New Zealand will be limited to DSL speeds until the network is extended to a full FTTH deployment (not planned at the moment as far as I am aware)

Singapore, rather than split up an existing telco (like Singtel or Starhub) have gone to tender for the three layers - Network, Wholesale and Retail. The government (Singapore Ltd) has decided that should only be one network and run by one company (Nucleus Connect - providing Fibre to the Home), that there would be a maximum of three wholesale companies and as many retail companies as the market will support. A big difference to New Zealand is that the Singapore government wants the wholesalers to offer a range of value added services - that they refer to as 'sit forward' services to engage the population rather than 'sit back' services that do not engage the population base. Retail companies would be free to pick and choose wholesale products for different wholesalers to provide differentiation of services.

Singapore, New Zealand and Australia are vastly different countries - Singapore is only 700km2 in size, Australia is a continent in it's own right and new Zealand is at the smaller end of in between. This is naturally going to have a dramatic effect on each Government's approach to a NBN. Singapore's highly structured approach is typical of the way Singapore does things. Australia's approach is less controlled - due to the nature of the political environment in Australia rather than it's size and New Zealand's approach seems somewhat half-hearted by comparison. I am not sure why the NZ government has not elected to build a new network independent of Telecom NZ's current network.

In Australia on the other hand, the government have set up
the Communications Alliance to manage the NBN and subcontract to the likes of
Telstra, Optus and others. The interesting thing with that approach (other than the false start that has already cost the Australian Taxpayers AU$30 million) and the thing that sets it apart from Singapore is that the approach doesn't seem to have any focus on the value added services (unlike Singapore's approach) - it's all about the network, even the wholesaler plan for Australia is talking about layer 2 protocols (See The Communications Alliance Wiki. All of the documents I have seen from Communications Alliance are all about the network - all very low level stuff.

Of course, these three countries are not the only countries that are going through a NBN project. For example the Philippines had a shot at one a few years ago - the bid was won by ZTE, but then a huge scandal caused the project to be abandoned. It came back a while later as the Government Broadband Network (GBN) but that doesn't really help the average Filipino. It's interesting to see how these projects develop around the world...

I had hoped to write an inciteful post this week about the National Broadband Network projects and contrasting the way that the three I have been involved in are dealing with them. In Australia (where I live) there has been a LOT of bad media coverage for the NBN project - the first attempt at which wasted AU$30 million of taxpayers money. Australia, New Zealand and Singapore are all tackling what is essentially the same problem in vastly different ways. Of course there are really good reasons for those differences, and I wanted to explain those as well... but, on my first week back from leave, things have gone nuts - this week, I've had four separate Service Delivery Platform RFI/RFPs plus some ongoing work with Globe, and other partners in Japan and New Zealand. The time I had hoped to set aside for the post just hasn't happened.

All I can say is that I am sorry and I hope to get that to you early next week while I am in Singapore and Bangkok. If you would like to see some other Telcom topics discussed, please fell free to comment and I will try and get to them...

Next week, I will be running a Telco training class for our System Integrator business partners in Bangkok - teaching, demonstrating and helping them to come to grips with IBM's software offerings in the Telecom industry - it should be good, I am looking forward to it..